WASHINGTON (MarketWatch) — The conventional wisdom says the Federal Reserve is keeping interest rates so low that it doesn’t pay to play it safe, and that it’s encouraging investors to do all sorts of crazy things to earn a higher yield.

Supposedly, the central bank is forcing investors pump up stocks, junk bonds, farm land and all the other bubbles you’ve been reading about.

It’s a nice story, but the data show that U.S. investors are still conservative about where they put their money.

At the end of the first quarter, low-yielding assets totaled 84.5% of annual disposable personal income, the highest share in 23 years. Sure, people need to keep some money handy to pay their bills and some folks might have a few hundred or a few thousand in a rainy-day fund, but no one needs immediate access to the equivalent of 11 months of income.

In essence, there’s $10.8 trillion stuffed into mattresses.

That $10.8 trillion hoard represents a failure of Fed policy.

Since the Fed began quantitative easing in September 2012, U.S. households have socked away $1.17 trillion in their low-yield accounts. That means that 95% of the Fed’s $1.24 trillion QE3 ended up not in bubbly markets but in a safe and boring bank account.

Since the recession began more than six years ago, the Fed has been trying to encourage people to put their money to work in the economy. That’s why the Fed has kept interest rates low and has been buying up trillions of dollars worth of relatively safe securities, hoping to push us to take on a little more risk.

After all, an economy can’t really grow if no one’s willing to gamble on the future.

But many of us don’t want to. We are still afraid, so we prefer to put a large part of our savings in assets that are guaranteed, like FDIC-insured bank accounts, or into money-market funds whose sponsor guarantees the return of the principal.

The point of Fed policy has been to get people either to consume more or to lend their money to others who would invest it productively. Either way, aggregate demand would rise, boosting the economy and creating more jobs.

The Fed can point to some successes: Consumer spending and business investment have bounced back, but both are somewhat weaker than they usually are coming out of recessions.

The majority of Americans are doing their patriotic bit, spending nearly everything they earn. A recent report from the Fed showed that little more than a third of families are able to save any money at all after they pay their bills each month. More than 60% say they couldn’t come up with $400 in an emergency without borrowing or pawning something.

Most people are saving next to nothing, while just a few are saving a significant amount. Those who do save are saving a ton — more than $1.2 trillion a year.

According to the Fed’s financial accounts data and definitions, the personal savings rate has averaged about 10% of disposable income since the recession ended, up from around 7% before the recession. That means upper-middle class and wealthy Americans are saving nearly $400 billion more a year than they used to.

That extra $400 billion would be a boon to the economy if it were being consumed or invested.

But high-income Americans don’t want to consume any more than they already do. The upper-middle class is desperately saving for their kids’ college and for their own retirement. And the truly wealthy have everything they desire, so they are saving a lot, buying equities, bonds and real estate, and adding to their bank balance.

In theory, the money they deposit in the bank should flow into the economy when the bank makes a loan. But bank lending to businesses has been very soft, up just $160 billion in the past year.

Businesses haven’t been relying on bank loans anyway, because their internal cash flow has been more than adequate to finance their investments in new structures, equipment and intellectual property. Since the recession ended, internal funds have exceeded capital spending in every quarter.

When companies do borrow, they use the proceeds to buy back shares or to acquire whole companies, neither of which adds to the stock of our national wealth. Since the recession ended, corporations have spent about twice as much money on buying their own stock and the shares of acquired companies as they have borrowed from banks.

Corporations have been buying so many shares that they haven’t raised any money on net in the stock market from households in years. In fact, households have been raising money from corporations, to the tune of about $450 billion a year.

So, even though U.S. households are saving lots of money, very little of it is flowing through to the economy. There are 10.8 trillion reasons to think the Fed has failed to get the American people to take on more risk.

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